Dori Kimel, From Promise to Contract: Towards a Liberal Theory of Contract
(Oxford: Hart, 2003). Pp. viii, 149.
Contract theory has long been a fractured field of study. For decades, there has
been a schism between contract laws orthodox defenders and those who question the
very existence of the institution. The former claim (roughly) that contract embodies a
liberal tradition wherein the law serves to facilitate the free will of individuals as that
will is expressed in promises. Skeptics argue that will and promise have little to do
with judicial decisions, and that contract law is merely a species of liability wherein
the law will compensate those who have detrimentally relied on the representations of
others.
Dori Kimel steps into this familiar argument. In From Promise to Contract,
Kimel claims to offer a fresh perspective on the traditional contract law dichotomy
that he hopes will give a new vitality to the liberal understanding of the institution.
He endeavours to cast the promise-liability debate into a new framework by means of
drawing attention to what are, according to Kimel, overlooked differences between
promise and contract.
The project Kimel sets for himself is an ambitious one, and his approach is
thoughtful and sophisticated. Initially identifying with the orthodox, promissory
tradition of Charles Fried, Kimel seeks to expand
that understanding by
differentiating between promise and contract. The crucial difference, says Kimel, is
that contracts are enforceable.
The fact that contracts are enforceable serves as the departure point for Kimels
thesis. Unlike promises, contracts attract the external sanction of the law. The result is
that the intrinsic value of each institution is markedly different. As Kimel explains,
making a promise amounts to weighting a statement with normative force based on
trust; the institution of promising is inherently about trust. The use of the normative
foundation of trust through promising thereby serves to promote personal relations
which, according to Kimel, is the intrinsic value of a promise.
Contracts are different. Unlike promises, contracts are coupled with the threat of
sanction. This threat serves to significantly negate any role that trust may play in a
contract. But contracts are not without their own intrinsic value. That intrinsic value
is personal detachment. The institution of contract law, therefore, serves to provide a
forum in which willing parties can enter a relationship based on personal detachment.
Such detachment is intrinsically valuable insofar as parties who do not know each
other very well can enter a constructive relationship; Kimel points to the fact that
parties to a contract are most often strangers.
As the paradigmatic illustration of his thesis, Kimel refers to the employment
contract of an academic. Such a contract provides a circumscribed field in which a
professor and a department may enter a relationship. Once the contract is complete,
the professor will often proceed to engage in valuable personal relationships apart
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from the contractual one, relationships in which normative values such as trust may be
regularly imbued. Contract, in other words, has facilitated a detached forum in
which a baseline relationship between the professor and the department can be defined.
Other, personal relationships can then safely be cultivated outside of that initial
contract, relationships in which trust is not negated by the legal sanctions attached to
contract.
These differences between promise and contract (wherein trust is the intrinsic
value of the former and detachment that of the latter) present, says Kimel, a new
direction for promissory theories of contract. His observations are often convincing
and his detachment theory may well prove a useful direction for other theorists.
Other aspects of the book are interesting but less forceful. In one of the books
five chapters, Remedies, Kimel attempts to overcome another long-standing
problem in contract law: the question of why expectation damages, and not specific
performance, are granted as the usual remedy for breach of contract in the common
law. Kimel addresses this problem by acknowledging that, theoretically, specific
performance is indeed the primary remedy, but that a version of John Stuart Mills
harm principle prevents the granting of it. In support of this, he argues that since
contracts, most often, are essentially about profit, the granting of expectation damages
provides an acceptable substitute to the innocent party. As such, the states granting of
a performance remedy would thereby amount to doing unnecessary harm to the party
who has committed the breach.
Kimel further employs the harm principle to investigate other doctrines of
contract law. As with that on specific performance, these discussions are often erudite
but somewhat superficial; he relies heavily on the harm principle without a full
investigation into the nature of the rights that are obtained in a contractual situation.
And his arguments often stay far above the day-to-day world of judicial decisions,
making it hard to determine the fitness of his conclusions.
Kimels final chapter is dedicated to pushing contract theory back into a liberal
framework. His challenge here, as it has been for other theorists, is to defend contract
law as an institution embodying liberal freedom despite the fact that its operation has
become increasingly dominated by judicial and legislative intrusion. Kimels solution
for fitting the often square peg of contract law into the round hole of liberalism is to
broaden the definition of liberalism. Drawing once more on moral philosophy, the
author seeks to recast the liberal ideal in such a manner that it can encompass
government intervention in the private law. Within this revised definition of
liberalism, doctrines such as inequality of bargaining power uphold individual
freedom rather than restrict it.
Whether Kimels reconstruction of liberalism can stand as a legitimate definition
is, of course, subject to debate. Nevertheless, his efforts do suggest a new context
from which contract law might be evaluated. At the same time, though, Kimels
endeavour would have benefited from a more thorough historical investigation of
contract law itself.
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BOOK NOTES – RECENSIONS
227
Poor writing is the books greatest shortcoming. Kimels style is cumbersome,
and needlessly obfuscates his ideas. While the subject matter itself is often difficult,
Kimels poor writing requires that the reader, at times, expend enormous effort simply
to follow the discussion.
Ultimately, From Promise to Contract represents a worthy contribution to an old
and ongoing debate in contract theory.
Jeff Roberts
J. Anthony VanDuzer, The Law of Partnerships and Corporations, 2d ed. (Toronto:
Irwin Law, 2003). Pp. xvii, 512.
It is high praise when a book aimed at law students is endorsed by judges. Such
praise accompanied the first edition of this book,1 and it will accompany the second.
The content has been updated to include new cases and recent federal amendments,
but the books accessible structure has stayed the same. Chapters on partnerships,
incorporation, shares, corporate governance, shareholder remedies, corporate
changes, and public companies continue to offer both the essentials of the law and the
reasons behind it.
A recurring theme throughout the book is the responsibility and accountability of
corporate officials. For example, how must directors of a company act in response to
a take-over bid? VanDuzer has updated his analysis to reflect key Ontario decisions,
which indicate that if the directors of the target have followed a process that is within
a range of reasonableness, Ontario courts will defer to the business judgment of the
directors without additional scrutiny, so as not to dilute the business judgment rule
into a weak potion.2
The accountability of corporate managers, especially lower-level managers, for
harm done in a community in which the corporation operates, is another example of
this recurring theme. Given the suspended prosecution of the two managers of the
Westray mine on charges of criminal negligence, it is unfortunate that VanDuzer only
discusses the tort liability of managers. A discussion of criminal liability would have
fit well with the related question of when a court should pierce the corporate veil
and hold managers personally liable for their actions. Parliaments response to
Westray was that corporate managers should be more accountable. For criminal
negligence purposes in particular, the Criminal Code will now expressly state that
1 See e.g. Backman v. Canada, [2001] 1 S.C.R. 367 at para. 37, 196 D.L.R. (4th) 193; Peoples
Department Stores Inc. (Trustees of) v. Wise (2003), 224 D.L.R. (4th) 509 at para. 67 (Qc. C.A.).
2 Re CW Shareholdings Inc. v. WIC Western International Communications Ltd. (1998), 39 O.R.
(3d) 755 at 776, 160 D.L.R. (4th) 131 (Gen. Div.); Maple Leaf Foods v. Schneider Corp. (1998), 42
O.R. (3d) 177, 113 O.A.C. 253.
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everyone who has the authority to direct how another person does work or performs a
task is under a duty to take reasonable steps to prevent bodily harm to that person or
anyone else.3
Another issue that VanDuzer does not discuss is who should hold corporate
officials accountable. The Ontario Securities Commission is increasingly being asked
to enforce corporate law duties in the context of public companies.4 Crown
prosecutors acting on behalf of the community are another option. The risk here is
that the prosecution may be too vigorous in the wake of public outrage. In an
admonition of the Westray prosecutors, Justices McLachlin and Major wrote:
[T]he entire conduct of this trial has brought the administration of justice into
disrepute We cannot be tolerant of abusive conduct and dispose of due
process, however serious the crimes charged Throughout the proceedings
the Crown bent and broke rules, and attempted to cover up when it was caught.
The entire proceedings were tainted by prosecutors who were playing to an
enraged public, and playing to win. [T]o win at all costs is an affront to the
Canadian justice system.5
Private enforcement under tort law, either individually or in a class action, is a
third option, but as the insolvency of Curragh Inc. shows, in an action for damages
there is always the risk that what little money is available will be quickly depleted.
The most noticeable addition to the book is a chapter on corporate social
responsibility. The essence of this topic lies in part of the Walkerton affair, in which
seven people died and more than 2,300 were injured after drinking water
contaminated with E. coli bacteria.6 Under the privatized system, A&L Canada
Laboratories East, Inc. was responsible for testing Walkertons water. A&L manager
Robert Deakin was required by law to report water contamination only to Stan
Koebel, the general manager of the Walkerton Public Utilities Commission, which
was A&Ls client, and not also to the provincial authorities responsible for boil-water
advisories. Deakin chose not to voluntarily notify the provincial officials even
though, as Justice OConnor wrote, the test results showed gross contamination.
Justice OConnor determined that Deakins decision was responsible for four hundred
to five hundred illnesses, and possibly one of the seven deaths.
3 An Act to amend the Criminal Code (criminal liability of organizations), S.C. 2003, c. 21, s. 3
(royal assent 7 November 2003).
4 In addition to the rulemaking authority over corporate governance conferred by An Act to
implement Budget measures and other initiatives of the Government (S.O. 2002, c. 22, s. 187(3)), see
also on the adjudicate side Re Banks (2003), 26 O.S.C. Bull. 3377, and Re YBM Magnex International
Inc. (2003), 26 O.S.C.B. 5285.
5 R. v. Curragh Inc., [1997] 1 S.C.R. 537 at paras. 117-21, 144 D.L.R. (4th) 614.
6 All statements about the events in Walkerton are taken from Part One of the report by Justice
OConnor: Ontario, Ministry of the Attorney General, Report of the Walkerton Inquiry: The Events of
May 2000 and Related Issues (Toronto: Queens Printer for Ontario, 2002) especially 398-401.
2004]
BOOK NOTES – RECENSIONS
229
VanDuzers chapter on corporate social responsibility reviews the law and
economics literature on whether the sole focus of corporate officials should be
shareholder value. The previous chapters of the book show this law and economics
discussion to be too academic. As the book indicates elsewhere, managers are liable
in tort for harm to the community, and in any event, it is difficult to see how Deakins
decision could have ever increased shareholder value. VanDuzer states that the
contractual underpinning of corporate law is of little value here because community
members (1) do not engage in contractual bargaining with the corporation, (2) do face
serious collective action problems, and (3) cannot force corporate officials to
implement the communitys wishes. By stopping there, VanDuzer has not fully
answered the question: should someone in Deakins position be held accountable for
such a decision?
The easiest answer is that Deakin showed wanton or reckless disregard for the
lives and safety of other people, or on the lower civil standard, did not exercise the
care that a reasonably prudent person would have exercised in the circumstances. The
more nuanced answer takes into account the fact that the code of ethics governing
Deakins behaviour emphasized the supremacy of public welfare, yet Justice
OConnor called it ambiguous. If Justice OConnor, with the perfect vision of
hindsight, considered the reference to public welfare ambiguous, how accountable
should corporate officials like Deakin be? Was it unreasonable for Deakin to expect
that the general manager of a public body would act in the communitys best interest,
rather than the way in which Stan Koebel actually behaved? Would holding Deakin
accountable deter skilled people from becoming corporate directors or officers? If an
official like Deakin is to be held accountable, is the best place for this the corporate
statutes or the multitude of regulatory ones? These kinds of issues should be
discussed in the next edition of the book.
Even with its minor shortcomings, the second edition of VanDuzers book should
be required reading at every Canadian law school. It continues to bring a level of
clarity and accessibility to the subject matter that is missing in other texts. It remains
part of an excellent series that includes first-rate books by Vern Krishna, Ruth
Sullivan, David Paciocco, Jamie Benidickson, and John Currie. It deserves the
judicial attention that it will get.
Derek Smith
